Railroads are disadvantaged in being both labor intensive and capital intensive. Labor expenses have historically comprised about half of all railway operating expenses. Capital assets represent astronomical acquisition and replacement costs for railroads, which have asset turnover ratios (annual revenue divided by total assets) around 0.5 using book values which grossly underestimate replacement costs, versus asset turnover ratios for truck lines around 2.0. Furthermore, no amount of capital could replace railroad right of way through industrial areas today.
Railroads have responded to decreasing market share by attempting to decrease labor expenses and plant expenditures even faster. Over the last seventy years U.S. railroads' share of the merchandise intercity freight market has fallen from 90% to 10%, their employment has been cut by 1,700,000, or 83%, and 110,000 miles, or 42% of their right of way has been abandoned (which far exceeds the 42,000 total interstate highway miles in operation today). Minimization of labor costs and plant requirements have been generally accepted as appropriate strategic objectives for the industry, and technological innovation has been directed at cost reductions.
It is known to arrange freight trains into Blocks of cars, a Block being a set of cars destined for the same point. The conventional cost-cutting goal is to create trains with the largest, longest-distance Blocks possible; because longer, fewer, farther-destined trains should reduce the number of train service employees required and the number of line-of-road tracks and sidings required per ton-mile moved, given current work-rules and operating procedures. Therefore, as many Blocks are created at each classification yard as can accumulate a significant number of cars over a twenty-four hour period, such that only a few Blocks need be coupled together to reach maximum safe train length, and such that each train sets off Blocks and picks up Blocks en route as seldom as possible. For example, a modern hump yard will typically have 30 to 60 classification tracks, each track collecting cars to be emptied out five to seven times per week for inclusion in 100-to-150 car trains of three-to-five Blocks each.
The nominally optimal solution to running trains and blocking cars in order to minimize the number of trains operated for a given amount of traffic (and thereby minimize the number of crews and engines used) is given by the integer programming model in FIG. 1. The two major assumptions justifying this model are reasonable: that variable costs are a stepwise function of the number of crews used, with other operating costs for a given amount of traffic being fixed, and that the arrival rates of cars into the system are predictable. However, this model is not commercially viable for two primary reasons: even with the selective elimination of improbable variables, the matrix inversion required to solve this model is too large for available computers, except for trivial problems (see FIG. 2); and the integer programming solution does not take into account any transit time requirements.
In practice the railroads develop train schedules and blocking patterns through trial and error, striving for maximum-length minimum-number-of-Block trains subject to minimum service constraints. This results in highly fragmented, complicated, and inconsistent service. "Unit trains" are run in the specialized instances where a large volume of traffic all from one origin or gathering point to one destination or distribution point is available at one time (such as mineral, grain, or double-stack container unit trains). Otherwise, trains are run with combinations of Blocks. The common practice is to divide the non-unit trains further into separate intermodal, "manifest" (general merchandise), and customized-service systems--the intermodal trains operating between piggyback terminals, the manifest trains operating between classification yards, and the customized-service trains operating between industrial serving yards or specialized terminals. Each system sorts cars as they enter that system into Blocks of cars, with each Block dispatched to its respective destination once per day or so--sometimes in "advertised" trains, sometimes in "extras," which are dispatched as needed.
The manifest car is particularly erratic in movement as it "leapfrogs" from classification yard to classification yard in unreliable "hops" as service fluctuates during the week. The upshot is that each time a freight car stops moving, it generally has one chance each twenty-four hours to get moving again. The average distance traveled per day by a U.S. railroad freight car in 1984 was 54 miles.
A serious ancillary problem of the present scheduling and blocking practices is the inefficient and insensitive use of labor. Conventional freight train timetables, even if they were strictly followed (which they usually are not), cannot coordinate the efficient use of resources. Only a small fraction of line-haul crews work a standard eight hours .+-. thirty minutes. Most either work much less but get paid for eight hours anyway or work much more (up to the federally-mandated twelve-hour maximum), for which they are paid "time and a half" with little real time before reporting back to duty. There is widespread use of "extra boards," groups of train service employees with no regular assignments but who are on two-hour call beginning eight or ten hours after their last assignments, who run extra trains and fill in on all-too-irregular advertised trains. Even advertised line-haul crews usually spend half of their sleeping time away from home.
Operations usually vary day-to-day with volume and resource changes, and even subtle daily differences in trains cause conflicting movements and compounding delays. There is the confusion bred of irregularity. There is the inexorable elimination of individuals with a sense of urgency or with outside interests requiring specific off-duty time (like athletic, social, or religious activities). There is a high incidence of sleep disorders, substance abuse, and family problems. In a society which places emphasis on personal time and recreation, the railroads must pay dearly for labor under current practices. Their transportation workers are disaffected, yet fiercely fraternal and intransigent about archaic jobs and working rules. In 1984, the average railroad engineer had a high school education, was on duty fifty-one hours per non-vacation week, and earned $46,650. Their supervisors were asked to work much longer for much less.